Are Rotork plc, Tribal Group plc And Regus PLC Buys Or Sells After Today's Updates?
Shares in industrial company Rotork (LSE: ROR) have soared by over 10% following the release of its full-year results. Even though the flow control product specialist recorded a fall in sales of 11.9% and a drop in pre-tax profit of 26.2%, the market seems to have welcomed the upbeat outlook statement provided by the company.
In fact, Rotork appears to be confident about its long term outlook, encouraged by the progress of its accelerated cost management programme and the actions it is taking to mitigate the effect of market weakness. It sees opportunities to increase its market share and as evidence of its confidence in future profitability, Rotork has increased dividends by 0.8%. This puts the company's shares on a yield of 2.9% and with dividends being covered 1.8 times by profit, there is scope for faster rises in future.
Clearly, Rotork faces continued challenges from a low oil price and slower growth in China. And with its shares trading on a price to earnings (P/E) ratio of 19.7, they appear to be rather expensive. Therefore, it may be prudent for investors to wait for a keener price before considering a purchase.
Also reporting today was workspace provider Regus(LSE: RGU). Its full-year results showed a rise in revenue at constant currency of 15.9%, while reported earnings per share rose by 66% versus the prior year. As a result, the dividend was increased by 13% and with Regus on-track to meet current year expectations, it appears to be in the midst of a period of highly impressive financial performance.
Looking ahead, Regus is due to increase its bottom line by 31% in 2016 and by a further 21% in 2017. This puts it on a price to earnings growth (PEG) ratio of just 0.8, which indicates that its shares could continue their 24% rise of the last year.
Certainly, Regus may still be a rather lowly yielder, at just 1.7%. But with its dividend covered 2.9 times by profit, there is tremendous scope for a rapid rise in shareholder payouts over the medium to long term. Add to this upbeat growth prospects and it appears to be a strong buy.
Meanwhile, shares in education services provider Tribal Group(LSE: TRB) have soared by over 30% today after it announced the disposal of its Synergy children's services management information system business to Servelec for £20.25m in cash. The net proceeds from the transaction will be used to reduce Tribal's net debt and will strengthen its focus on core operations. They will also allow Tribal's rights issue to be smaller than previously planned, with it now due to amount to £21m versus the previously announced £35m.
Looking ahead, Tribal appears to now have the capital with which to deliver on its planned turnaround. While this may not be a smooth process, the company is due to be profitable this year and it could therefore be of interest to less risk averse investors who can live with a relatively high degree of volatility.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Rotork. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.